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January 13, 2011, 01:42 PM
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If you want a good read, go through the 90 page objection filed recently by CNOC. Here's a 2 page copy of one of their key points - haven't finished reading the article. This excerpt demonstrates exactly why UBB is a load of shit.
2010-08-30 - #: 8638-C12-201016882 - Follow-up to Regulatory Policy CRTC 2010-632 - Wholesale high-speed access services proceeding (cost studies - ILEC)
Taken from the 3rd page of the article, or the 8t page in the PDF
End-user-based Usage Caps and Charges
• End-user-based usage caps and charges, as proposed by the Companies and Rogers in this proceeding,
are anti-competitive and should be rejected.
• The application of the same economic usage-based-billing (“UBB”) regime to both dominant carrier
retail Internet access services and wholesale high-speed access services on an end-user basis stifles
service differentiation and innovation its retail Internet services. Wholesale customers end up being
forced to charge the same retail UBB rates as the incumbents.
• A UBB regime just adds to the disadvantages already faced by wholesale customers of the dominant
carriers, such as the application of technical ITMPs to wholesale traffic.
• The incumbents are not required to apply UBB to their telephony, video (e.g., IPTV or cable) and
other broadband services, whereas, the wholesale high-speed access services that competitors require for
providing competing retail telephony, video and other services are subject to ITMPs, such as UBB. This
is unduly discriminatory. Competitors are prevented from offering a wide variety of differentiated
broadband services and service bundles, including but not limited to retail Internet access service,
telephony and video triple-play bundles.
• Wholesale high-speed access services customers also incur additional transportation costs and other
costs to provide end-user services, in addition to paying for wholesale high-speed access services
customers, to carry retail Internet service traffic between the networks of the dominant carriers and the
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• UBB is also costly to implement. Under a flat-rate structure, wholesale high-speed access services
customers typically charge for services provided to their end-users on a pre-paid basis, which
significantly reduces financial risk. When a wholesale high-speed access services customer is billed on a
UBB basis by a dominant carrier, that customer must pay the dominant carrier for all usage incurred, but
the wholesale high-speed access services customer has to bill its end-customers on a post-paid basis to
recover those charges, since they cannot be known in advance. Wholesale high-speed access services
customers’ financial risk increases dramatically as they become de facto collection agencies for the
dominant providers that provide wholesale high-speed access services charged on a UBB basis.
Wholesale high-speed access services customers must pay for the usage billed by the dominant carriers,
but then assume the full credit risk of getting that money back from their end-users.
• UBB revenues amount to anti-competitive cross subsidies from wholesale high-speed access services
customers to the dominant carriers arising from the fact that wholesale UBB rates are not cost-based and
constitute almost pure profit that the already financially strong incumbents can use to cross-subsidize their
• Under TRP 2009-657, the point of an economic ITMP such as a UBB regime is to curb peak usage
that causes network congestion, especially among the heaviest users. If that is its sole purpose, why are
technical ITMPs such as traffic shaping employed by the dominant carriers concurrently with UBB
• The objective of employing a UBB regime as an economic ITMP is not advanced necessarily achieved
in an efficient manner by the UBB regime selected by a dominant carrier. In the case of the UBB regime
approved for Videotron and the Companies, different UBB rates apply to different tiers of usage, and in
some cases, no UBB charges apply over large ranges of consumption, above (and in the case of the
Companies UBB regime below) which UBB rates apply.
• The use of an end-user-based wholesale UBB regime with all of the anti-competitive consequences
just described does not constitute regulation that is efficient and proportionate to its purpose, is minimally
intrusive and maximizes reliance on market forces as required by the Policy Direction.
• CNOC does not object to a requirement for wholesale customers (e.g., ISPs) that also compete with
the incumbents to pay for the network resources of the incumbents that the ISPs require to provide their
retail services. However, the present UBB regime that conceptually treats wholesale services provided to
ISPs the same as the incumbents treat their own retail Internet services is unworkable and interferes
unduly with the operation of market forces.
• The net effect of the present UBB regime is to encourage incumbents to constrain capacity, defer
investing in their networks and increase the price of broadband services, with the consequence that
Canada’s productivity and international competitiveness will suffer in the global digital economy.
• To date the damage caused by and end-user-based wholesale UBB regime is limited. Only Videotron
has employed such a regime and Videotron’s wholesale TPIA customer base is relatively limited. If other
carriers such as the Companies, Rogers and others are allowed to implement similar UBB regimes, the
anti-competitive impact will be much swifter and more severe.
• The Companies are poised to introduce a UBB regime for residential GAS as early as 1 March 2011.
The Companies and Rogers are also seeking approval of UBB rates in these proceeding. The Commission
has a unique opportunity to contain and reverse the damage by not approving any UBB rates in this
proceeding. In fact, CNOC would go further and recommend that the Commission, also institute a
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proceeding as soon as possible to revisit the approvals for UBB regimes already granted and to consider
other options for charging wholesale customers for usage sensitive network resources that are
competitively fair and will create a proper incentive for wholesale customers to manage the bandwidth
that they buy appropriately when providing service to their own end-users.
• This task is well within the capability of the Commission with the aid of the industry.
• As Commissioner Molnar noted in her dissent in Decision 2010-255:
“I would note that I am not convinced that the Bell companies’ proposal to apply UBB charges
based upon end-customer usage is the most effective Internet traffic management practice (ITMP)
approach. Nor am I persuaded at this time that an aggregated usage model, if properly structured,
would nullify the potential effectiveness of UBB as a means of managing network usage. Certainly,
an aggregated usage model would have provided ISPs that subscribe to the Bell companies’ GAS
(GAS ISPs) with greater flexibility to manage end-user pricing/service solutions. (Emphasis
• CNOC urges the Commission to heed Commissioner Molnar and explore devising an aggregated
usage model that compensates incumbents appropriately for the use of traffic sensitive network resources,
serves a suitable economic ITMP and provides wholesale customers greater flexibility to manage enduser
pricing/service solutions. Such a regime should not result in any increases in the flat-rate components
of wholesale high-speed access services.
Adjusting the Rates, Terms and Conditions Proposed by Incumbents
• CNOC urges the Commission to apply the rating principles described herein and to make the specific
adjustments to the rates, terms and conditions proposed by incumbents when considering the tariff
proposals of the ILECs and cable carriers being considered in these proceedings.
• In order to ensure that wholesale customers have enough time to make alternate arrangements for its
end-users, or bring an application to the Commission for wholesale access where an ILEC intends to
deploy FTTH facilities, CNOC requests that the ILECs be required to give its GAS-FTTN and HSAFTTN
customers one (1) year advance notice of any intention to convert FTTN facilities to FTTH in a
particular exchange, or of any move that would eliminate metallic continuity in an end-user’s local loop.
• CNOC also seeks assurances that ILECs and cable carriers will be required to treat wholesale
customers in an equivalent manner when it comes to the availability of higher-speed services.
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